RF's Financial News

Sunday, April 24, 2016

“NO - not show YOU the money.Show ME the money.”…Jerry McGuire (movie)

Demographics In View

Over $51B has been pulled
out of mutual funds thus far in 2016, and Lipper says that an additional $3B
more was removed last week. In addition, Hedge funds have lost over $15B
this quarter.A lot of this is being
blamed on the market’s volatility, negative interest rates, and horrid economic
numbers. I think that there’s a lot of
truth to that. But a different angle on
‘Show ME the Money’ is in play.

This is the year when the
first wave of ‘Baby Boomers’ will turn 70 years old. For the next 20 years, approximately 3 million
people (per year) will turn that magic number. These ‘Boomers’ grew up during the most
productive times in history. They had
the good jobs.They made the most money,
and most have 401k's. ‘So what?’ you ask.

Well, there's a law that
requires: IF you have a 401k and IF you are 70.5 years old – you MUST start
taking your money out of your 401k. So using
conservative numbers:

-3 million folks turning
70 this year, and (being conservative) 50% have a 401k. They (to date) have resisted taking their money
out because the market just kept going up, but NOW they have no choice – it’s
the law.

-That also means
that 1.5m are no longer putting money into their 401k’s (given they’re being
forced to liquidate them). That doesn’t
sound too terrible until you realize that next year we will add another 1.5m to
that withdrawal list, and the year after that, and the year after that. All the while additionally adding to the non-depository
list.

Economists will tell you
that these new 70-somethings will begin to buy things like never before –
because they are ‘flush with cash’.I,
on the other hand, believe that these new 70-somethings will continue to keep
their expenses low so that they don’t out-live their money.

This naturally adds more
sellers than buyers to our stock market. Unfortunately, for stocks to move up – you need
more buyers than sellers. Lately,
corporations have been doing the buying via borrowing money or selling their
own bonds, and then using the proceeds of the sale to buy back their own stock.
With more and more 70-somethings
liquidating their 401k’s, either our government comes up with more ways to prop
up stocks, or stocks have no choice but to go down.And if stocks go down too far, companies
won't be able to pay the coupon on the bonds that they sold to re-purchase
their stock. Imagine the train wreck (crash)
if 35% of corporate America was to default on their own corporate bonds?

My point is that over the
next several years, our FED is going to have to get incredibly clever with
their shenanigans to stave off the wave of Baby Boomers – hitting 70.5 years of
age and liquidating their 401k’s.Desperate times often lead to desperate measures, and maybe negative
interest rates in the U.S. is one of those measures.We know that our current debts can’t be paid,
and debts that can’t be paid – won’t be paid.With trillions in debt, there’s going to be a reset and the retiring
Baby Boomers are just another reason why.

The Market...

We've just come through a
week of horrible earnings. Microsoft (MSFT)
missed, Google (GOOG) missed, Intel (INTC) guided lower and slashed 12K jobs, Caterpillar
(CAT) had sales down 13% and was just a disaster. I think this coming week will look something
like last week – a lot of chop, but in the end not a lot of directional travel.
But at least we have some levels we can
use as a barometer for further gains or losses. The high on the S&P this past week was
2111, and the low was 2081.So, in
general terms, buying when the market is over 2111 makes sense, and sitting
tight or going short under 2081 works for me.

Factually (speaking of
manipulation):

-Eric Hunsader
CEO Nanex LLC reported that if you would have bought and sold the index futures
between 2am and 3:00am (buying at 2:00am and selling at 3:00am) – from 2005
until 2016, you would have captured half of the market’s total gains and NONE
of the losses. Unbelievable!

-This week one of
the nation’s largest pension funds has applied for permission to cut benefits to
its 250,000 members by approximately 50%. The fund has missed its benchmark for
performance for years, and now 250k people face the reality that their $3k a
month check may only be $1,600/month going forward. FYI: If they don't get permission to cut the
benefits, the pension fund will be insolvent by 2025.

-This week, when Draghi
was speaking about the ECB’s plans – the ECB itself was selling $2B of ‘naked’ gold
futures in order to keep the price of gold down. This was an illegal sale done blatantly by
the ECG. I happen to agree that the
miners needed a bit of a correction as they've soared like eagles lately, but it’s
a blatant (in your face) manipulation.

Simply put, we are
continuing: (a) with 0% interest rates, (b) to overload our FED’s balance sheet,
(c) to print $85B Euro's a month and have NEGATIVE interest rates in Europe,
(d) to flounder in Japan, and (e) to chatter at the upper echelons about ‘helicopter
money’ – simply depositing $2.5k to $5k cash in every bank account around the
world.

Now you have to ask
yourself: Why (after 7 years into a recovery) are we still doing economic accommodations
at full blast? Why are the Banksters talking about ‘helicopter money’
with the markets at all time highs?Why
does half-the-world have negative interest rates? On one side there are
hundreds of reasons why stocks should be moving lower.On the other side, there is a manic Central Banking
system that is hell bent on ‘Doing what ever it takes’ to keep markets moving
higher.Who wins this battle?I'm siding with reality.If all it took to keep markets inflated was for
The Wizard of Oz to print money – don’t you think we would have done that by
now?Even our Banksters know that the printing
press is nothing new.

TIPS:

Congratulations to all of
you that followed me on the ‘Vegas Play’.The strategy turned $20k into $94k within the past 6 months.I’ve received a lot of mail over the past week
surrounding this, and allow me to recap and address our next moves.To recap: 6 months ago I recommended
investing in a silver / gold miner: First Majestic Silver Corp. (AG) – using an
‘At the Money’ options strategy that went like this:

-AG stock (at the
time) was selling for $3.12 per share, and had traded as high as $30 in the
past.

-If these steps
worked according to plan, you would successfully have turned about $20k into
$500k in 18 to 24 months if AG’s stock went to $20, or $1.1M if AG’s stock went
to $25.

This was the same ‘At the
Money’ options strategy that was used on the miners several years ago, and I
felt (6 months ago) that the miners were ready for a move higher.

The Good News is that AG’s
stock touched over $10 per share this week – and ended the day (on Friday) at $8.90.If you did the deal, you have successfully
turned $20k into $94k in 6 months.The
bad news is that because AG’s stock has risen so quickly – we didn’t get the
‘Call Option’ premium decay that I had anticipated – and therefore did NOT make
as much money as I had planned.

But this play (in anyone’s
book) has already been a big winner. Any
time you turn $20k into $94k in 6 months – you have hit a home run.There are NO guarantees that it will continue
to work.If you’re nervous about the trade,
then close it out for a huge profit, sell half, or skim some profits off the
top and continue.As for me, I’m
continuing with the plan – with a couple small modifications.When AG’s stock touched $10, the option
makers adjusted the price of the $10 options higher than normal.So I’m going to split my next buy purchasing
50% - $10 options, 35% - $12 options, and 15% - $15 options.

If you’ve been reading my
column for any length of time, you know that I feel that there’s a grand reset in
the works, and Gold is going to be used as a backing for certain currencies with
silver tagging along for the ride. I
have said for years that silver will be $75 to $100 per ounce – and it almost made
it there in 2011. I think that silver is
destined for higher prices – so taking some $12 and $15 options / 20 months out
is a risk that I’m willing to take.You
can play it safer by taking what you can get of the $10 options, and even
buying some $7 ‘In The Money’ options is fine too.The play is already a massive winner.

Can you get into the play
now?I say YES.If things continue to go as ‘sort of’
planned, then this $94k will turn into $700k.You can certainly start by buying some $7 January 2018 Call Options on
AG.We know that this same style of trade
worked in 2010 and 2011.But yes you,
can start the play today – even though it is a little more risky.

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts
and trades – my handle is: taylorpamm.

Please be safe out there!

Disclaimer:

Expressed thoughts proffered within
the BARRONS REPORT, a Private and free weekly economic newsletter, are those of
noted entrepreneur, professor and author, R.F. Culbertson, contributing sources
and those he interviews. You
can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com>
.

Please write to Mr. Culbertson at:
<rfc@culbertsons.com>
to inform him of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
<rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual
stock trades - and see more of his thoughts - please feel free to sign up as a
Twitter follower - "taylorpamm"
is the handle.

If you'd like to see RF in action -
teaching people about investing - please feel free to view the TED talk that he
gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

Views expressed are provided for
information purposes only and should not be construed in any way as an offer,
an endorsement, or inducement to invest and is not in any way a testimony of,
or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are
not registered and licensed brokers. This
message may contain information that is confidential or privileged and is intended
only for the individual or entity named above and does not constitute an offer
for or advice about any alternative investment product. Such advice can only be
made when accompanied by a prospectus or similar offering document. Past performance is not indicative of
future performance. Please make sure to review important disclosures at the end
of each article.

Note: Joining BARRONS REPORT is not
an offering for any investment. It represents only the opinions of RF
Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF
FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN
INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING
HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT
SOME PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF
INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS
MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING
INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance
can be volatile. An investor could lose all or a substantial amount of his or
her investment. Often, alternative investment fund and account managers have
total trading authority over their funds or accounts; the use of a single
advisor applying generally similar trading programs could mean lack of
diversification and, consequently, higher risk. There is often no secondary
market for an investor's interest in alternative investments, and none is
expected to develop.

All material presented herein is
believed to be reliable but we cannot attest to its accuracy. Opinions
expressed in these reports may change without prior notice. Culbertson and/or
the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

Sunday, April 17, 2016

You held closed-door
meetings with President Obama this past week, and I’m betting that he told you
that your ONLY job was to continue to keep this stock market up.The ‘heck’ with doing the right thing (and
beginning to normalize interest rates) your #1 job is to make sure that the
stock market remains inflated because it’s the ONLY thing separating us from a
crushing depression.

We both know that your
Zero Interest Rate Policy (ZIRP) has stimulated corporate buy-backs, and that
corporate buy-backs are the difference maker in keeping this market
afloat.We also know that J.Q. Public
sees the stock market as a reflection of the economy, and as long as it’s
flirting with ‘all time highs’ he feels good enough to take on more debt.And the world runs on debt and credit.Every
day banksters create ‘derivatives’ that they sell to other investors. These ‘Asset-Backed Securities’ (ABS) are
bonds or notes backed by financial assets – typically consisting of receivables,
auto loans, housing contracts and home-equity loans. As you can imagine,
if the individual assets inside these bundled securities start to go south,
then the assets themselves begin to implode. Think of it exactly like the mortgage debacle
of ‘05 – ‘08.

Now if we both can agree that the real impetus
behind the stock market's rise over the past few years has been corporate
buy-backs ($430B in 2014 and $540B in 2015), then you need to concentrate on
the CREDIT market and not on the stock market.Why?Because corporations are
BORROWING the money to do the stock buy-backs from the credit market.For example:

-The XYZ company (with a $15
stock price) decides to borrow money from the credit markets at 6.5% - in order
to buy-back their own stock.

-To borrow the money they use
their sales ‘receivables’ as collateral.

-XYZ starts buying back their
own stock, meanwhile the world begins to take notice.

-The world participates in the
stock price increase, and drives the price to $30.

-Unfortunately, each quarter XYZ’s
sales are falling, and they lay-off more and more workers just to make ends
meet. That is to say, their business is
dying yet the stock price is rising.

Now Ms. Yellen, it’s NOT the
stock price increase that bothers me.What worries me is a company’s CASH ability to pay back the 6.5%
INTEREST that they owe on the borrowed money – used to drive their stock price
higher.See by using the monies to drive
their stock price higher, they did NOT invest in R&D or in becoming more
efficient.

But wait - it gets better.What about the investor that loaned XYZ the
money?What happens to the Bank, Pension
fund, Insurance fund, and/or Hedge fund when XYZ defaults on paying their 6.5% interest
payment?Honestly, they’re going to take
a big hit to their asset ledger and their credit market capabilities could be
downgraded.This downgrade is solely due
to XYZ’s inability to pay what they owe on the borrowed money.

So the reason to worry about a corporation’s
declining revenues (sales) is not how the stock price will suffer (and it may),
but rather how a corporation can re-pay their interest on their debt
obligations given reduced revenues.A
major corporate default could trigger an immediate debt downgrade, and then we
would be looking at 2008 all over again.

So I believe that you can NOT get a ‘leg up’ on
interest rates because an increase in interest rates (coupled with falling
sales and earnings) would trigger a series of corporate interest payment
defaults – from which the world could not recover.Therefore, if stocks can't hold a particular price,
then some tangible amount of corporate debt will become non-performing. If enough of it does, we have contagion, and a
repeat of 2008.

The
Market:

As SF so aptly pointed out, notice the spike in
business closures in February of 2016.

Align the above graphic – with a business’ needs
for growth capital – with all of the financial lay-offs occurring around the
globe – and you’ll begin to get the picture of a global downturn.

Factually:

-Alcoa kicked off
earnings season this week by announcing a sales decline, profits that were down
90% (year-over-year), and 1,000 new employee layoffs with another 1,000 in the

works.

-Consumer
confidence fell this week to sub 90 – a number not seen in years.

-Reuters confirmed that Deutsche Bank has agreed to settle U.S. litigation
over allegations it illegally conspired with Bank of Nova Scotia and HSBC
Holdings Plc to fix silver prices at the expense of investors. They also
say they are going to disclose info on other big players that were a part of
this same scheme.

If you've been watching
gold and silver you're seeing something we haven't seen in a long time. After a blistering run higher in gold, silver
and the miners, they did NOT roll back down. They traded sideways a bit, caught their
breath and have started moving higher again. This is definitely different. In the last 5 years, they would pop higher, but
then instantly roll right back down. I’m in a fair number of them, and
have hesitated talking too much about them because (for years) it was so easy
to get burned by buying false breakouts. However it looks like the tide has
turned. Just about all of the miners have once again started higher.Please feel free to check out some charts on:
NG, HL, KGC, SAND, AG, FSM, and DRD.

There
is still an EPIC battle going on in the stock market.On one side you have: horrible sales, lower
earnings, less shipping, a slowing China, lousy
durable goods orders, and stagnant wages.On the other side you have the incessant desire to keep asset values up in
order to keep trillions of dollars in
derivative debt from imploding. Thus far, the
various FED’s have kept things going.Can they keep all of these plates spinning long enough to come up with a plan B, which will be some form of
monetary reset?

Let’s look at the big picture. On February 11th of 2016, the market
was at 1820 on the S&P, and today we’re at 2080. On October 15th of 2014 (a year and a half
ago), the low of the day was 1820.So we
could fall all the way back to 1820 (a 12% decline) and not break the lower
range the market has been in for 2 years.With the market at 2080, we're still inside a major box between the high
of 2135 and a low of 1820.

My guess is that this upcoming week will be a
bit red. Yes it is earnings season and
stocks will pop and drop like crazy over individual releases, but it is my thinking
that we do a bit of fading. I am writing this AHEAD of the oil gathering
at Doha, so things could change quickly. If you're not familiar, there's a big meeting
of oil producing countries in Doha today – to see if they can agree on a
production cap. If this meeting is
viewed as a success, oil will spike and so will the markets on Monday. If it is a yawner, then I think that the
market is going to do some backtracking.

As hard as it is to believe, until we get over
2135 or below 1820 we’re just in a large range of up and down chop.Not a bull market or a bear market – just a
TRAPPED market. Try and buy the dips,
and sell the rips. It's a lot of work,
but the overall market has been running in place for 18 months. There's no solid trend, so you have to trade
what they give you.

To follow me on Twitter.com and on StockTwits.com to get my daily thoughts
and trades – my handle is: taylorpamm.

Please be safe out there!

Disclaimer:

Expressed thoughts proffered within
the BARRONS REPORT, a Private and free weekly economic newsletter, are those of
noted entrepreneur, professor and author, R.F. Culbertson, contributing sources
and those he interviews. You
can learn more and get your free subscription by visiting: <http://rfcfinancialnews.blogspot.com>
.

Please write to Mr. Culbertson at:
<rfc@culbertsons.com>
to inform him of any reproductions, including when and where copy will be
reproduced. You may use in complete form or, if quoting in brief, reference
<rfcfinancialnews.blogspot.com>.

If you'd like to view RF's actual
stock trades - and see more of his thoughts - please feel free to sign up as a
Twitter follower - "taylorpamm"
is the handle.

If you'd like to see RF in action -
teaching people about investing - please feel free to view the TED talk that he
gave on Fearless Investing: http://www.youtube.com/watch?v=K2Z9I_6ciH0

Views expressed are provided for
information purposes only and should not be construed in any way as an offer,
an endorsement, or inducement to invest and is not in any way a testimony of,
or associated with Mr. Culbertson's other firms or associations. Mr. Culbertson and related parties are
not registered and licensed brokers. This
message may contain information that is confidential or privileged and is
intended only for the individual or entity named above and does not constitute
an offer for or advice about any alternative investment product. Such advice
can only be made when accompanied by a prospectus or similar offering
document. Past performance
is not indicative of future performance. Please make sure to review important
disclosures at the end of each article.

Note: Joining BARRONS REPORT is not
an offering for any investment. It represents only the opinions of RF
Culbertson and Associates.

PAST RESULTS ARE NOT INDICATIVE OF
FUTURE RESULTS. THERE IS RISK OF LOSS AS WELL AS THE OPPORTUNITY FOR GAIN WHEN
INVESTING IN MANAGED FUNDS. WHEN CONSIDERING ALTERNATIVE INVESTMENTS (INCLUDING
HEDGE FUNDS) AN INVESTOR SHOULD CONSIDER VARIOUS RISKS INCLUDING THE FACT THAT SOME
PRODUCTS AND OTHER SPECULATIVE INVESTMENT PRACTICES MAY INCREASE RISK OF
INVESTMENT LOSS; MAY NOT BE SUBJECT TO THE SAME REGULATORY REQUIREMENTS AS
MUTUAL FUNDS, OFTEN CHARGE HIGH FEES, AND IN MANY CASES THE UNDERLYING
INVESTMENTS ARE NOT TRANSPARENT AND ARE KNOWN ONLY TO THE INVESTMENT MANAGER.

Alternative investment performance
can be volatile. An investor could lose all or a substantial amount of his or
her investment. Often, alternative investment fund and account managers have
total trading authority over their funds or accounts; the use of a single
advisor applying generally similar trading programs could mean lack of
diversification and, consequently, higher risk. There is often no secondary
market for an investor's interest in alternative investments, and none is
expected to develop.

All material presented herein is
believed to be reliable but we cannot attest to its accuracy. Opinions
expressed in these reports may change without prior notice. Culbertson and/or
the staff may or may not have investments in any funds cited above.

Remember the Blog: <http://rfcfinancialnews.blogspot.com/>
Until next week – be safe.

GetAbby.com IVR Solutions

A TRIPLE is only a TRIPLE when you make it to 3rd BASE!

In today’s world, if you can’t achieve having ALL 3 - then you’re just hitting three singles – and NEVER putting everything together – and therefore NEVER putting yourself in ‘scoring’ position! And frankly, if you’re not going to ‘score’ - why be in the game? All 3 of these elements (web avatars, IVR solutions, mobile applications) NEED to work together, and combine in order to significantly reduce customer service costs, while dramatically enhancing the customer experience, and increasing your customer knowledge, retention and let’s not forget – increasing your bottom line.

First base is your speech application. Applications need to recognize voice commands, understand accents, languages, and colloquial enunciations, everyone sees the industry moving in this direction - from buying airline tickets to feeding your Xbox commands - virtually everything needs voice technology. Second base is web interactivity – the ability to ask a web avatar a question – in your own words – in your own language (very similar to speech). The extra element the web provides is instant connectivity to thousands of “friends” receiving and sending status updates - allowing your product to reach a wider audience, cheaper – better - faster.
Third base takes includes your mobile device. Apple has sold over 2 million ipads in 2 months – even though it’s only been released in 9 countries. 5 Billion iPhone apps have been downloaded. AT&T stopped taking orders for the iPhone 4G after being open for 27 HOURS. So if mobile devices are NOT be a part of your strategy, think again. And just do the math – a mobile device application can be written for tens of thousands – and circulated to millions of people – giving you a total cost of ownership in the ‘pennies’ - what other device offers that consistency - scalability – and cost?

Our job at GetAbby is to put you in position to score. We bring it all HOME. We take all three of these sigles, combine them, and allow you to bring it HOME in one application. GetABBY provides the technology that allows you to book airline tickets over the phone, and have the confirmation ticket sent straight to your mobile device, and confirm thru an avatar on the web – where the avatar will present you with more money saving ideas on additional places to stay. We’re there for you, ready to take you past third base – taking it home, however; is up too you to GetABBY.